Custom, Excise & Service Tax Tribunal
Chettinad Structural & Engineering Ltd vs Cochin-Cus on 29 January, 2026
C/20909, 21425, 22269, 22270/2014,
C/21144, 21209, 21884/2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 20909 of 2014
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-207-13-14
dated 10.12.2013 passed by the Commissioner of Customs
(Appeals), Cochin.)
M/s. Chettinad Structural &
Engineering Ltd.,
Rani Seethai Hall, Appellant(s)
6th Floor,
603, Anna Salai,
Chennai.
VERSUS
Commissioner of Customs,
Customs House Cochin, Respondent(s)
Kerala - 682 009.
With
(i). Customs Appeal No. 21425 of 2014
(K.V. Ramana Shetty)
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-313-13-14
dated 07.01.2014 passed by the Commissioner of Customs
(Appeals), Cochin.)
(ii). Customs Appeal No. 22269 of 2014
(Shri. Kevin Chinoy)
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-387-13-14
dated 11.03.2014 passed by the Commissioner of Customs
(Appeals), Cochin.)
(iii). Customs Appeal No. 22270 of 2014
(Mr. Karl Panday)
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-386-13-14
dated 11.03.2014 passed by the Commissioner of Customs
(Appeals), Cochin.)
(iv). Customs Appeal No. 21144 of 2015
(Mr. Neeraj Mansukhlal Karnavat)
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-434-14-15
dated 06.01.2015 passed by the Commissioner of Customs
(Appeals), Cochin.)
(v). Customs Appeal No. 21209 of 2015
(Mr. Basheer Movval)
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C/20909, 21425, 22269, 22270/2014,
C/21144, 21209, 21884/2015
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-312-13-14
dated 07.01.2014 passed by the Commissioner of Customs
(Appeals), Cochin.)
(vi). Customs Appeal No. 21884 of 2015
(Mr. Jugjeev Singh Sarna)
(Arising out of Order-in-Appeal No. COC-CUSTM-000-APP-09-2015-
16 dated 22.05.2015 passed by the Commissioner of Customs
(Appeals), Cochin.)
APPEARANCE:
Mr. Baby M.A., Advocate for the Appellants M/s. Chettinad Structural &
Engineering Ltd. and appellants at Sl.No. ii, iii, iv and v.
Mr. S.S. Arora, Advocate for the appellant Shri Jugjeev Singh Sarna
None appeared for the appellant Shri K.V. Ramana Shetty.
Ms. Arpitha S., Joint Commissioner (AR) for the Respondent
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON'BLE MR. PULLELA NAGESWARA RAO,
MEMBER (TECHNICAL)
Final Order No. 20138 to 20144 /2026
DATE OF HEARING: 30.07.2025
DATE OF DECISION: 29.01.2026
PER : DR. D.M. MISRA
These appeals are filed against respective Orders-in-
Appeal, since involve more or less common issues viz.
confirmation of differential duty on bikes / motor vehicles
imported claiming benefit of concessional rate of duty, by
misdeclaration of year of manufacture, are taken up together for
hearing and disposal. Facts of each of the appeals is slightly
different; hence, narrated separately as below:-
2. Appeal No.C/20909/2014 (M/s. Chettinad Structurals
& Engineering Limited)
On the basis of intelligence that used foreign motor cars are
imported into India under Transfer of Residents Rules, by
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C/21144, 21209, 21884/2015
misdeclaraing the year of manufacture and sold within a period
of two years thereby violating the provisions of Customs Act,
1962, investigation was initiated by DRI against the imported
"Toyota Lexus LX 470" car bearing registration No. TN-09-AD-
5445 under the ownership/possession of the appellant M/s.
Chettinad Structurals and Engineering Limited. The car was
imported by one Shri Shoukhat Ali Pazhaya Pattilath through
Cochin Port against Bill of Entry No.12247 dated 28.01.2003 and
applicable customs duty was paid on 09.06.2003. Later, the
ownership of the said vehicle was transferred by making
necessary endorsement in the RC book to M/s. South India
Structural Corporation Limited (now known as Chettinad
Structurals & Engineering Limited). The year of manufacture of
car was shown as 12/2002 in the RC book, whereas it was
mentioned as 2003 as per the importer's insurance documents.
The imported vehicle was sold / transferred to the appellant on
06.10.2004 within a period of two years from the date of import
in contravention of Foreign Trade Policy(FTP). The motor vehicle
was seized and later released provisionally on 09.04.2008 on
execution of bond and Bank Guarantee. On completion of
investigation, show-cause notice was issued on 07.06.2008 to
the importer as well as to the appellant making jointly and
severally liable and proposed to enhance the value to
Rs.13,17,081/- under Rule 8 of the Customs Valuation Rules,
1988; demanded differential duty of Rs.5,76,139/- under Section
28 with applicable interest; confiscation of the seized vehicle was
proposed under Sections 111(d), 111(m) and 111(o) of the
Customs Act, 1962; proposed penalty under Sections 112(a) /
112(b) / 114A of the Customs Act, 1962. On adjudication, the
year of manufacture was considered as 12/2002; confirmed the
enhancement of assessable value and duty of Rs.5,76,139/-
which was directed to be paid jointly and severally by Shri
Shoukhat Ali Pazhaya Pattilath and M/s. Chettinad Structural and
Engineering Ltd. Car was confiscated with an option to redeem
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C/21144, 21209, 21884/2015
the same on payment of fine of Rs.1.00 lakh; appropriated
differential duty of Rs.6.00 lakhs paid; imposed penalty of
Rs.1.00 lakh on Shri Shoukhat Ali Pazhaya Pattilath under
Sections 112(a) and 112(b) of the Customs Act, 1962; penalty
of Rs.9,37,714/- was imposed on M/s. Chettinad Structural and
Engineering Ltd. under Section 114A of the Customs Act, 1962.
3. Appeal No. C/21425/2014 (Shri K.V. Ramana
Shetty) and appeal No. C/21209/2015 (Shri Basheer
Movval)
One Shri Basheer Movval, through Cochin Port, imported Tyota
BMW Saloon X5 3.0 l car bearing registration No. TN-09-AF-6055
against Bill of Entry No.128753 dated 11.07.2003 on which
customs duty was paid on 26.07.2003. Later the vehicle was
sold and transferred to Shri K.V. Ramana Shetty on 06.02.2008.
The year of manufacture of the vehicle as per the RC book was
06/2003 and the assessable value of the vehicle was declared as
Rs.15,30,988/-. Alleging that the declared year of manufacture
of the car was misdeclared; accordingly, customs duty of
Rs.7,86,845/- was short-paid, show-cause notice dated
24.07.2008 was issued to Shri Basheer Movval and Shri K.V.
Ramana Shetty on making them jointly and severally liable for
payment of differential duty and confiscation of the seized
vehicle along with proposal for penalty. On adjudication,
differential duty of Rs.7,86,845/- was confirmed against Shri
Basheer Movval and Shri K.V. Ramana Shetty and the amount
deposited only by Shri K.V. Ramana Shetty has been adjusted
against the liability; seized vehicle was directed to be confiscated
under Sections 111(d), 111(m) and 111(o) of the Customs Act,
1962; it was allowed to be redeemed on payment of fine of
Rs.1.00 lakh. Penalty of Rs.2.00 lakhs was imposed on Shri
Basheer Movval under Sections 112(a) / 112(b) of the Customs
Act, 1962. Penalty of Rs.7,86,845/- was also imposed on Shri
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C/21144, 21209, 21884/2015
K.V. Ramana Shetty under Section 114A of the Customs Act,
1962 with interest.
4. Appeal No. C/22269/2014 (Shri Kevin Chinoy) &
appeal No.C/22270/2014 (Shri Karl Panday)
One super bike Suzuki GSX-R 1000 bearing registration No. MP-
44-MA-4112 was imported by one Shri Vinod Damodaran Thayyil
against Bill of Entry No.167768 dated 19.10.2005 and duty of
Rs.1,65,514/- was paid on 20.10.2005 against the declared
value of Rs.1,19,999/-. The motorcycle was declared as 1999
model; however, later it was noticed that the motorcycle is of
2005 make. The said bike was later purchased by one Shri
Kevin Chinoy through Shri Karl Panday, a bike dealer, who was
in possession at the time of initiation of investigation by the DRI
on the issue of under valuation. After competition of
investigation, a show-cause notice was issued on 04.10.2010 to
Shri Vinod Damodaran Thayyil and Shri Kevin Chinoy jointly and
severally liable and the duty of Rs.1,47,967/- should not be
recovered from them jointly and severally and proposal for
penalty. Also, notice was issued to Shri Karl Panday for
imposition of penalty. On adjudication, the differential duty
demand was confirmed against Shri Vinod Damodaran Thayyil
and Shri Kevin Chinoy jointly and severally; directed confiscation
of the bike under Section 111(m) of the Customs Act, 1962 with
an option to redeem the same on payment of fine of Rs.50,000/-
; penalty of Rs.50,000/- was imposed on Shri Vinod Damodaran
Thayyil under Section 112(a) of the Customs Act, 1962; penalty
of Rs.1,47,967/- on Shri Kevin Chinoy under Section 114A and
penalty of Rs.25,000/- on Shri Karl Panday under Section 112(b)
of the Customs Act, 1962 were imposed.
5. Appeal No. C/21144/2015 ( Shri Neeraj Mansukhlal
Karnavat) & Appeal No.C/21884/2015 (Shri Jugjeev
Singh Sarna)
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During the course of searching the premises of one Shri Jaspal
Singh alias Bittu, New Delhi, along with other bikes, DRI noticed
one old and used motorbike with foreign make viz. Suzuki
Hayabusa 1300 CC bearing registration No. MH-06-AD-3448.
Investigation initiated by DRI revealed that the said bike was
registered with RTO Raigad in the name of one Shri Neeraj
Mansukhlal Karnavat and he had received the motorbike from
one Shri Sarna, later found to be Shri Jugjeev Singh Sarna.
Statement of Shri Jugjeev Singh Sarna revealed that he had
purchased the said bike from one Shri Amit Nanda in July 2008
who provided him original copy of Registration Certificate and
copy of the Bill of Entry No.165208 / 01.09.2005. He met with
an accident near Rewari and the bike got damaged and it was
sent to Shri Jaspal Singh alias Bittu for repair. Further
investigation revealed that the said bike was imported by Shri
Neeraj Mansukhlal Karnavat against Bill of Entry No.165208
dated 01.09.2005 declaring its assessable value as Rs.60,827/-
and duty of Rs.82,453/- was paid on the said bike. Alleging
that the year of manufacture was misdeclared as 1999, a show-
cause notice was issued on 06.08.2010 to Shri Neeraj
Mansukhlal Karnavat and Shri Jaspal Singh alias Bittu from
whose possession the vehicle was seized demanding differential
duty of Rs.6,04,169/- with proposal for confiscation and
imposition of penalty. On adjudication, the demand of
differential duty was confirmed against Shri Neeraj Mansukhlal
Karnavat and Shri Jugjeev Singh Sarna and Shri Jaspal Singh
alias Bittu, jointly and severally; motorcycle directed to be
confiscated with an option to redeem the same on payment of
fine of Rs.1.5 lakhs and also penalty of Rs.75,000/- on Shri
Jugjeev Singh Sarna under Section 112(b); penalty of
Rs.6,04,169/- on Shri Neeraj Mansukhlal Karnavat were imposed
under Section 114A of the Customs Act, 1962.
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6. Aggrieved by the orders of the original authority, the
appellants have preferred appeals before the learned
Commissioner(Appeals) who in turn rejected their appeals.
7. At the outset, the learned advocate for the appellants
except for the appellant Shri K.V. Ramana Shetty has submitted
that in all these cases, after import of the motorbikes / cars, the
respective importers had sold the same to the prospective
buyers on whose name the RTO has effected the transfer in the
RC book. After 3 to 5 years, the Department has initiated
investigation and seized the vehicles from their possession
alleging under valuation and misdeclaration of the year of
manufacture. To avoid further harassment, the owners of the
vehicles deposited the differential duty and sought provisional
release of the cars / bikes on execution of bond and bank
guarantee. He has submitted that all the demand notices were
issued later making the importers and the owners of the vehicles
jointly and severally liable for the recovery of the differential
duty and the act of alleged under valuation by misdeclaring the
year of manufacture of the respective cars / motorbikes. He has
submitted that the orders cannot be sustained as the demand of
differential duty cannot be saddled on the bona fide purchasers
being not the importers in view of the recent judgment of the
Hon'ble Supreme Court in the case of Nalin Choksey Vs. CC,
Kochi [2024 SCC OnLine SC 3610]. Further, he has submitted
that since the Hon'ble Supreme Court has quashed the
proceedings initiated against the purchaser of the vehicle;
therefore, the demands against the purchasers in the present
case also to be set aside. Further, he has submitted that the
demand is confirmed jointly and severally without apportioning
the amount between the importer and the purchaser which
cannot be sustained and accordingly, the demands are to be set
aside.
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8. Learned AR for the Revenue has reiterated the findings of
the learned Commissioner(Appeals).
9. Heard both sides and perused the records.
10. The short issue involved in the present appeals is whether
the liability of differential duty on the imported cars/bikes which
have been imported by various importers allegedly misdeclaring
the year of manufacture can be fastened on the purchasers; and
wherever could be confirmed jointly and severally on the
importers & purchasers.
11. From the records, we find that on the basis of intelligence,
DRI has initiated investigation visiting various premises of the
car dealers / car-bike dealers / service persons and collected
data about the owners of the imported vehicles. Later through
investigation, ascertaining the year of manufacture, it revealed
to the investigating officer that while importing the cars/
motorbikes, the year of manufacturer has been misdeclared and
concessional rate of duty was paid availing Transfer of Residence
benefit. The show-cause notices thereafter were issued making
parties, both importers as well as owners of the vehicles from
whose possession the vehicles were seized making the importers
as well as the owners of the vehicles jointly and severally liable
for recovery of differential duty and for misdeclaration of the
year of manufacture. The crux of the issue whether the
Department can proceed against the purchasers of the vehicles
who were not the importers and purchased the vehicles under
normal course of business from the importers. The issue is no
more res integra and covered by the judgment of the Hon'ble
Supreme Court in the case of Nalin Choksey (supra). Their
Lordships after analysing the definition of 'importer' held as
follows:-
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11. We have considered Section 28(1) of the Customs Act in
order to ascertain whether the appellant herein is the
importer of the car in question. On a reading of the definition
of the expression 'importer' under clause (26) of Section 2 of
the Customs Act. The definition reads as under:
"Section 2 - Definitions. - In this Act, unless the context
otherwise requires, -.
****
(26) "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner, beneficial owner or any person holding himself out to be the importer;"
12. As per the above inclusive definition, an "importer" can include an owner, a beneficial owner or any person holding himself out to be the importer. But these personae would fall under the above definition only during the time between the importation of goods and the time when they are cleared for home consumption. Admittedly, the appellant was not the importer of the car in question, nor was the appellant involved in the process of importation of the car. The car was neither imported for his benefit nor on his behalf. It was Sri Jalaludheen Kunhi Thayil who was the importer from whom no recovery of the differential duty had been made. The appellant herein is only a subsequent purchaser of the said vehicle from a person who had purchased the same from the importer. Thus, the appellant cannot be charged for paying customs duty under Section 28 of the Customs Act as an importer or owner of the goods within the meaning of the definition of importer.
13. We have also considered the reliance of the learned senior counsel for the respondent on Section 125 of the Customs Act.
The relevant portion is as follows:
"125. Option to pay fine in lieu of confiscation. -- (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit:
Provided that where the proceedings are deemed to be concluded under the proviso to sub-section (2) of section 28 or under clause (i) of sub-section (6) of that section in respect of the goods which are not prohibited or restricted, no such fine shall be imposed:
Provided further that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person Page 9 of 11 C/20909, 21425, 22269, 22270/2014, C/21144, 21209, 21884/2015 referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods."
14. It is undisputed that there is a confiscation of the car in question in this case and the import of the said car is not prohibited. Also, as per the aforesaid definition, the owner of the goods, or where such owner is not known, the person from whose possession or custody such goods have been seized, shall be given the option to pay a fine in lieu of confiscation and where such fine is imposed on the owner or the other person, they shall be also liable to pay any duty and charges payable in respect of such goods. However, firstly, the appellant is not the owner of the car coming within the definition of importer under the customs Act as discussed above. Secondly, in order that the appellant is to be construed to be the owner of the vehicle in question, it is necessary to advert to the provisions of the Motor vehicles Act, 1988, which defines 'owner' under Section 2(30) of the said Act. The said section reads as under:
"2. Definitions. - In this Act, unless the context otherwise requires, xxx (30) "owner" means a person in whose name a motor vehicle stands registered and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement;"
15. A reading of the above would indicate that when a motor vehicle stands registered in the name of a person, he would be the owner of the said motor vehicle. Section 49 of the Motor Vehicles Act, 1988 deals with the necessity for registration. Admittedly, in the instant case, the car in question has not been registered in the name of the appellant herein but the registration certificate continues to be in the name of the original importer Sri Jalaludheen Kunhi Thayil. Therefore, the latter is the owner of the vehicle in law. It may be that there has been a transfer of the vehicle from Sri Jalaludheen Kunhi Thayil to Sri Shailesh Kumar from whom the appellant has purchased the vehicle. However, there is no ownership in law which can be recognized insofar as the appellant herein is concerned inasmuch as his name has not been entered in the registration certificate concerning the vehicle in terms of the provisions of the Motor Vehicles Act, 1988. Hence, the appellant herein cannot be construed to be the owner of the vehicle and hence, he does not fall within the scope and ambit of Section 125 of the Customs Act, 1962. Further, the argument that the appellant can be made liable to pay the duty because the seized car was in the possession of the appellant cannot also be accepted, since as per Section 125(1) of the Customs Act, the possessor of the car can be made liable only when the owner of the goods is not known. However, in the instant case, it is an admitted position that the ownership of the vehicle in law is still with the importer Sri Jalaludheen Kunhi Thayil and thus, the owner of the vehicle is known.
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16. Consequently, the very initiation of the proceedings against the appellant herein under the provisions of Customs Act by summoning him by issuance of Show-Cause Notice and subsequent seizure and confiscation of the vehicle in question are not in accordance with law and are unlawful.
12. Following the aforesaid judgment, the demands against the purchasers-appellants cannot be sustained. Besides, since the demand is confirmed against the importers jointly and severally, the differential duty demands confirmed also cannot be sustained in view of the judgment of the Tribunal in the case of Rimjhim Ispat Lt. Vs. CCE, Kanpur [ 2013 (293) ELT 124 (Tri. Del.)]; consequently, imposition of penalty on the appellants also cannot be sustained. Accordingly, the impugned orders are set aside and appeals are allowed with consequential relief, if any, as per law.
(Order pronounced in open court on 29.01.2026) (D.M. MISRA) MEMBER (JUDICIAL) (PULLELA NAGESWARA RAO) MEMBER (TECHNICAL) Raja...
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